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June 19, 2001
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Money > Business Headlines > Report June 19, 2001 |
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AES offers to cut Dabhol power to below Rs 3Santosh Tiwary US-based power major AES Corp has offered to reduce the Dabhol Power tariff to below Rs 3 within six months of taking over the project. All the contracts can be renegotiated and the tariff brought down to levels demanded by Maharashtra within these six months, AES sources said. Sources said the lenders can enforce the security clause and transfer management of the project to any other company in the event of default by Dabhol Power Company on its repayment obligations. They however added that DPC has not defaulted on any of its repayments till date. AES executives told Business Standard that during the six month period, the tariff could easily be brought down to Rs 3 per unit including the transmission costs. "At this rate, neighbouring states can afford power from Dabhol," they said. "All the litigations can be put on hold during the six month period when AES is running the plant," said a top AES executive. When contacted, financial institution sources said that the lenders can enforce the security clause. They said in case a borrower defaults, the FIs can take possession of the assets which are collateralised with them. They said there have been instances where the lenders have forced companies to relinquish management in favour of another company. However, the domestic lenders will have to necessarily take Centre's approval for enforcing the security clause. AES offer to the institutions assumes significance with Dabhol Power Company contractors stopping work on the second phase of the $2.9-billion project. In a statement on Sunday, DPC said that the lenders were not willing to support the venture and the company had received notice that the construction contractors had terminated further work on phase II. With Maharashtra State Electricity Board having stopped buying power from DPC, the company is likely to find it hard to make payments to the construction contractors. MSEB had earlier also said that it would not take power from Dabhol's phase II. DPC managing director Wade Cline said in the statement that lenders were finding it "near impossible" to disburse additional funds for construction of phase II. "Since the contractors cannot continue to work without payment, they have terminated their construction contracts," the statement added. Powered by YOU MAY ALSO WANT TO READ:
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